Obama nears final overtime decree

The unilateral measure, which does not require Congressional approval, will raise “from $23,660 to as much as $52,000 the threshold below which workers must be paid overtime.” Don’t expect low-wage workers to benefit: “[B]usinesses offset new overtime costs with lower base wages. One recent study found that workers pay for 80 percent of overtime costs through such base wage cuts.” That doesn’t mean it’s a wash, though: “The change will kill flexible schedules for entry- and mid-level salaried employees.” [James Sherk, Daily Signal] And the measure’s true target, as with so much union-backed labor regulation, is the upwardly mobile job seeker: “Ambitious workers intent on proving their value by taking on extra responsibilities will be severely hobbled in their ability to do so, and instead be reduced to time-clock punchers.” [J.C. Tuccille, Reason]

We covered this truly awful idea at some length last year.


  • Shorter version: any law that limits the capitalists’ ability to oppress labor cannot be good. Seriously. a 40 hour workweek is a good thing for society, even though it might not be good for individual businesses.

    If employees really want to advance and work more than 40 hours a week, fine. Their base salaries will be less and they will make it up in overtime. IMHO, this is a more honest way to pay for the work.

    • I am not sure how government’s intervention into a contract between two parties that will result in both parties being harmed is “good for society,” Allan.

      Heck, a case can be made that when we restrict people’s right and choices in when and how much they work, the individual right’s are trampled and in that, there is actual societal harm.

      • IMHO, you gotta have some rules, otherwise, we end up like St. Petersberg in 1917. Preventing a proletariat revolution is good for society? No?

        I am not sure whether this one goes too far, on the margins but I do think it is on the correct track.

  • @GC–

    I usually share Walter’s free-market slant, but not this time.

    Perhaps, for bona-fide management development jobs, simple time rather than time and a half should suffice. But the age when “paying one’s dues” with 80-hour workweeks guaranteed a career at IBM or GE are long gone.

    The last generation has seen the extinction of the 2nd quintile of earnings in the population, aka the “middle class.”

    Society is harmed when natural middle-class jobs, the type that can allow married couples to raise families, are collapsed by unscrupulous employers into 80-hour-a-week jobs for Willie Lomans who don’t care about families.

    Special exceptions might be made for glamorous careers in politics, journalism, or the arts. For most careers, however, the time to demonstrate one’s diligence and potential is during normal hours. If you are that good, your boss will be happy to pay you by the hour for overtime.

    • Hugo,

      A case can be made that if we have seen the extinction of the middle class, it was killed by over regulating businesses. When the government started to add regulations on everything from hours to insurance to accounting to ADA accommodations to sick leave to maternity / paternity leave etc, the business was putting money into meeting the regulations rather than the pockets of the employees.

      People talk all the time about the “minimum wage,” but when you add all the costs an employer has to pay for that employee, the actual hourly wage is far higher.

      It doesn’t make any sense to me to try and solve the problems created by regulations and government intervention with more regulations and more government intervention.

      It is easy to talk about big companies, but they aren’t the driving force behind the economy. The small to middle sized businesses get killed with regulations made by people who have never run a business in their life.

      If the middle class is dead or dying, it wasn’t business who killed it.

  • I’m on the front lines of this. It will result in lower pay for the same work, certainly fewer work hours, but significantly less opportunity to improve one’s station.

    • Why? The work has to get done. The market has set the rate of pay. 80 hour of work will have to get done. In the past it was X dollars. Now, it is X dollars.

      Either the employer will pay the overtime on a lower salary, or the employer will hire more workers. But the work will get done at the same cost to the employer. And the employee will know how much he/she is being paid per hour.

      I don’t know why there will be “significantly less opportunity to improve one’s station.” {/on hyperbole} Certainly, there are other ways to show value to an employer than being a slave {/off hyperbole).

      In sum, I would call this the Truth in Employment Act. Employers are made to tell the employees how much their hourly rate is.

      • Allan,

        The market used to set the rate of pay. It no longer does because the government is setting the rate of pay.

        It is interesting that you bring up the Russian revolution of 1917. There people were working and controlled by a class that of people that ruled them, took their money and their lives, and cared not one iota about the people themselves.

        That is exactly what is happening here. The government is no different than the czars of Russia who limited people’s rights, who limited people’s ability to make a living, and who stole from their pockets for their own pet projects and beliefs.

        But the work will get done at the same cost to the employer.

        Maybe, but probably not. There is a benefit to allowing people to work overtime. The employee gets more money in their pocket. The employer gets the job done at a higher rate because the overtime employee has more experience.

        Now what you are advocating for is the worker being told he has to go home. The employer being told they cannot reward the worker with some extra money if they want it.

        Please explain what right or set or morals should allow the government to step in between a contract between two people? Such nonsense hurts businesses, hurts owners and hurts employees and yet we keep thinking that doing the same thing over and over is going to change the course.

        It won’t.

        • A few points.

          First, in Russia, had the people with the capital treated the workers better, there would have been no revolution and no confiscation of property. This is totally different from what is happening here.

          Second, the 40 hour workweek is a standard that should be upheld. If employers want people to work more, they should pay a premium. Nothing is stopping employers from having their workers work overtime. All this regulation does is make sure that low-level employees are treated in a fair manner.

          third, this regulation does not prevent overtime.

          Fourth, this regulation does not hurt anyone, except for employers taking unfair advantage of their employees.

          Some believe that we need to have baseline rules for the workplace, i.e., for safety, for wages, for hours work. Apparently, you are not in that group.

          • Allan,

            First, in Russia, ….

            To some extent I agree. But it is the very same call of “we aren’t being treated fairly” that is in the US today. Despite having one of the highest standards of living for the poor, people still think they aren’t getting enough from those with the capital.

            Second, the 40 hour workweek is a standard that should be upheld……

            Why? If I want to work 60 hours a week at a certain rate and my employer agrees to that rate, what right or moral imperative is it of the government to say “you can’t do that?” As a free born, natural person, don’t I have the right to make contracts and agreements with other people? As for “paying a premium,” once again I ask “why?” Who in the heck are you or some government flunky to say that if I want to earn a few more bucks at an agreed upon rate that I can’t do that?

            All this regulation does is make sure that low-level employees are treated in a fair manner…..

            Who decides what is “fair?” You think it is “fair” that the government should control every aspect of a business (or at least most of it.) I think that is inherently unfair. You think that it is “fair” that the government owns and controls the work and labor of a person. I think that is unfair and akin to slavery or at least some sort of indentured servitude.

            If regulations are in place for “fairness,” then why the change in regulations? Were the ones in place previously “unfair?” And since the government instituted rules that it now deems “unfair,” what is to say this set of rules and regulations will be “fair?” After all, it is not as if the government has a good track record in “fairness” in any area which it has stuck its nose.

            third, this regulation does not prevent overtime.

            No, but it redefines overtime and when it kicks in. It gets in the way of a contract between adults.

            Fourth, this regulation does not hurt anyone, except for employers taking unfair advantage of their employees.

            The regulation interferes with the rights of people. That is a harm to everyone.

            Some believe that we need to have baseline rules……

            And some believe that the government does not protect rights, but acts as a bully, forcing people to act against their rights and best interests. Apparently you are in that group.

          • Society places all sorts on what people can do. That is what differentiates society from anarchy.

            There is nothing to prevent people from contracting to work 60 hours per week. This regulation merely states that 20 of those hours be considered overtime. It does not get in the way of a contract, it just adjusts how the contract is written. You can earn what you want.

            A 40 hour workweek should be standard. Why? Why not? We have to define full-time work somehow (or maybe we don’t).

            The previous rules were fair (or as fair as these rules), they just did not adjust for inflation.

            the bottom line is that these rules will have little effect whatsoever, except for employers who pay $30,000 per year, claiming it is $15 per hour, but expecting their employees to work 80 hours per week (effectively making it $7.50 per hour). I simply consider it similar to a truth in advertising rule.

  • @Allan, I wish I could say my experience mirrored your expectations, but int hew big corporate world where I worked, that simply wasn’t the case. Hourly employees, for fear of risking an adverse employment decision, wage and hour (break and lunch) schedule, or some other disparate impact lawsuit, simply didn’t get an opportunity for overtime, or flex schedules, or anything else. The marginal value of the work “getting done” simply wasn’t worth the risk-adjusted expense the company felt it would incur from that kind of litigation. Thus, work fell behind and stacked up (at whatever cost to the rest of the company) until it was so far behind that everyone could be offered overtime for a significant period of time over a number of days to reduce that potential exposure. The hidden cost to the company of work not getting done didn’t show up on the budgets of those responsible for staffing, so they didn’t care. Led to a view of hourly employees as replaceable cogs, whose individual performance was unimportant.

    Low level salaried employees were expected to get the work done, whatever it took. They took home a salary of X, which was the same whether they got the work done efficiently, got the work done by someone else, or took their sweet time about it. When you signed on the dotted line, you knew what you were signing on for. Employees who survived were either spectacularly good at making their bosses look good, or spectacular at moving from position to position laterally before their screw ups could catch up with them (supported by a system which discouraged upper management from admitting they didn’t manage their direct reports very well).

    Crappy, monstrously inefficient way to run a business in my view – but it allowed the company to avoid justifying any individualized decisions regarding employment. The very best and brightest, of course, beefed up their resumes and moved to more dynamic companies.

  • CarLitGuy,

    Sounds like a Union Shop to me.

  • Allan,

    Society should not put rules on people when there is no harm to others. Societal rules such as “don’t kill someone,” “don’t steal,” etc. are examples of such rules. Here you are for a rule where there is no harm to either individual. In fact, the only harm comes in when the government says “you have to do this….”

    I believe that you are being disingenuous when you say “there is no rule that says a person cannot work 60 hours a week,” but not taking into account the agreement the employee and the employer may have for the rate of pay. If a person wants to work 60 hours, they cannot unless the pay is within the rules set by the government and not the people making the work contract.

    As for the “standard” of a work week, it seems that you cannot come up with a good reason for that standard. Shouldn’t standards or rules have a basis? If 40 is a good number, why not 20? Why not 60? It’s arbitrary and by definition, arbitrary standards are not standards.

    Finally, you can say this is “truth in advertising,” but that seems ridiculous to think that a person who agrees to work for someone can’t figure out their wage. Most phones, tablets and computers come with calculators. If not, go to a store and buy one for a buck. Failing that, you can always try actual pencil and paper.

  • Sorry, I disagree with you. IMHO, the US economy is the greatest economy in the world because in the early part of the last century, it developed a strong and vibrant middle class. Accordingly, I support policies that tend to foster the middle class. Of course, if policies support one group, they might detract from another. Thus, you might be right that these types of law restrict liberty, but I think that the restrictions are on the margins and help develop a better, stronger, and richer society. Without such laws, the rich and powerful will become moreso and the middle class will whither until we only have the rich and the poor. The absence of a middle class, I believe, is what foments revolutions of the proletariat (I would submit that economics can be found to be the cause majority of the revolutions in the past 100 years).

    Maybe in economics terms, I am saying that the policies produce a greater good on the macro level than harm on a micro level in terms of society as a whole.

    I understand that you do not believe society should not have these rules at all. I disagree. I believe that your version of society would lead to disaster. The question in my mind is not whether there should be rules, but whether the rules imposed will lead to the greater good. And I write this with with a great deal of skepticism of big government, recognizing that the temptation of corruption and graft is everpresent.

    On the other topic. You might have the wherewithal to figure out an actual salary and make a good decision based on that determination. I would suggest that you have a better grasp of economic matters than, say, your typical fast food restaurant assistant manager. I would also suggest that you have greater responsibilities and a greater ability to earn more than the $52,000 maximum under the regulations.

    At the bottom, I think you have ultimate trust in the market and a great distrust of government. Others may have no trust in the market and great trust in government. I am somewhere in between, a pragmatist, if you will.

    • Allan,

      While you want to defend “society in the macro,” the fact of the matter is that society is made up of individuals with rights which the government should protect and not abuse. Your opinion of what constitutes a “robust society” is one where liberty and freedoms are restricted. It is hard for me to see any “robustness” while people are in governmental chains.

      At one point the middle class was thriving. What killed it? To some extent, regulations. Yet people like you think that despite regulations putting the middle class on life support, more regulations will somehow make it all better.

      (I won’t quote Einstein’s definition of insanity, but it applies to the argument you are trying to make.)

      Let me give you a couple real life examples of how your regulation utopia works.

      A friend of mine owns a trucking company. They haul dirt, gravel, rocks, etc intrastate. For the most part that work is a lot of government work. Whether for the state or the Feds, roads, parking lots, etc all require the services of trucks to move earth. But there’s a catch. In the contracts with the government, the contracts stipulates the pay the company has to pay the drivers. That rate of pay is LESS than what the company pays on private jobs. My friend complained saying that he wanted to pay the drivers more. The government told him he couldn’t He tired getting around it by paying bonuses for the workers on the government jobs to bring their pay up to those working private jobs. The government caught wind of that and fined him. (Think about that….. the government FINED a company for paying their employees more.) The regulation artificially held down the wages of truck drivers and hurt the working middle class. But it gets worse. Because all trucking companies were hit with the regulations, you couldn’t reward long term drivers for their service. People coming in the door make the same as those who were with the company for 10 years. The result of that is higher turn over because there is no economic incentive for a driver to stay with a company anymore. Companies can’t fight for the best drivers and pay the best drivers a higher rate because the government regulations in which you believe won’t let them.

      A corollary to that is the amount of paperwork mandated by the government has increased. So the money that would have gone into raises and bonuses for drivers and office workers now goes into regulated paperwork that doesn’t keep people safer, isn’t read by anyone and most of all, doesn’t make anyone money.

      Second story….I used to officiate at the college and below level in several sports. My home town had a youth basketball league. (Notice the past tense of HAD.) The league paid teens to officiate games. Most of the time it was younger ages and the work was supervised. A 13 – 15 year old kid could make $10 – $15 an hour officiating. Not a bad deal when you think about it from the perspective of the kid who made money and learned an avocation they could take with them to college and make more than at a fast food place. Of course, the government decided that such things were bad. So they banned that type of work for kids of that age. At one point there was a movement to try and get the regulation reversed, but I was long gone by then. Without the kids officiating, the league had to turn to adults who demanded and got a lot more money. Three times the amount per game in some cases. The league couldn’t stand the financial hit. It couldn’t raise the price of registration to make up for the higher costs. The league folded and went away. The regulations took money out of kid’s pockets and then put over 500 kids out on the streets.

      THAT’S your society in the macro Allan.

      I respect your opinion that “my way would lead to disaster,” but that way worked well for a long time in this country. A VERY long time.

      While you claim that you are a pragmatist, I think that you are the exact opposite. Your world view is contrary to reality. You keep pushing for more regulations even when regulations have harmed and continue to harm the middle class.

  • “There is no worse tyranny than to force a man to pay for what he does not want merely because you think it would be good for him.” (Heinlein)

    – and –

    “Good intentions will always be pleaded for every assumption of authority. It is hardly too strong to say that the Constitution was made to guard the people against the dangers of good intentions. There are men in all ages who mean to govern well, but they mean to govern. They promise to be good masters, but they mean to be masters.” (Daniel Webster)

    – and –

    “Of all tyrannies, a tyranny exercised for the good of its victims may be the most oppressive. It may be better to live under robber barons than under omnipotent moral busybodies. The robber baron’s cruelty may sometimes sleep, his cupidity may at some point be satiated; but those who torment us for our own good will torment us without end, for they do so with the approval of their consciences.” (C.S. Lewis)

    I will vote against you Allan, and disagree strongly with your assumption that the espoused policy cure (more laws) will strengthen what’s left of the American middle class.

    • That is one way to look at it, Carlitguy. Give me a buzz when you get to Somalia, which may be the only place in the world that qualifies as a free society as you might define it.

      I do not think that C.S. Lewis would consider the regulations proposed by Obama to be a sign of tyranny. Nor would he think that the US is anywhere near a tyranny. He lived in times when Nazi Germany and Soviet Russia were at their most fierce.

      And Daniel Webster is an interesting choice. He has been described as an elitist and advocated for a stronger federal government.

      I don’t know who Heinlen is or was.

  • Somalia is among the least libertarian places on earth, and the “go back to Somalia” line is perhaps the lamest taunt in current circulation against advocates of limited government:


    • Thanks for the link. I especially liked that point that the country is acting in a more fascist than capitalist way.

      It actually fits into my theory. Perhaps I am so much for government regulation of companies in favor of workers because the system is so tilted toward corporations.

      Maybe the right way to go about this thing is to take away all the corporations’ advantages, rather than give advantages to workers. That might actually fit hand-in-glove with the libertarian view of affirmative action, which is not to discriminate against the majority, but to stop discrimination altogether. But it comes with the same problem, i.e., how to rectify the past wrongs of government intervention.

      I will have to think about this. In the meantime, I would love to see more libertarian ranting against our current fascist system…

      As an aside, it makes me think of how fascism and communism approach problems from exactly opposite scenarios. Fascism seems to be big government for the benefit of big business. While communism seems to be big government for the benefit of workers. Libertarianism seems to believe smaller government will level the field to the extant that neither workers nor businesses have a comparative advantage.

      The trick for libertarianism is to creat a system where neither workers nor businesses can game the system.

  • I am no anarchist, pointing to a failed state like Somalia says little about the right form of national government, it merely illustrates that the strongman approach to local rule benefits only the strongman and those he favors.

    I simply believe that their are no perfect systems, and that the way to maximize the greatest benefit for the greatest number at the least harm is to reduce the size of the system being gamed – since as the system grows it inevitably dictates more and more of our individual lives as a society, and thus provides incentive for regulatory capture by one group or another seeking to use the states power to secure benefits for themselves at the detriment of the rest of society over the long term (at the least) and more likely, in the short and intermediate terms as well. As well, I believe that social systems obey laws much like physical systems – the greater the number of layers of supervision/authority, the greater the inefficiency in the system, and thus, the greater the waste born by the people to maintain there chosen form of government. The trick, of course, is finding an adequate level of supervision and ability to make decisions regarding our leadership (so as to avoid the rule of Tyrants) without diverting needless resources to the maintenance of government for government’s sake (i.e. the creation of huge, largely unaccountable bureaucracies divorced from the consequences and responsibility for their actions) – which simply deprives the governed of resources they would otherwise have for their benefit.

    • Not bad… But, what system will prevent a rule of the oligarchs, i.e., feudalism? The industrial revolution brought forth the end of feudalism in England. At that time, serfs could simply move to cities. But, then, the owners of factories became the feudal lords, without the society-imposed requirement to care for and protect their “subjects.” And Noblesse Oblige went under at that time, too.

      Perhaps modern day Russia, with its lack of checks and balances, as well as rise of the rich and powerful would be more to your liking than Somalia.

      Don’t get me wrong, I think you should stay here, because the good ole USA is a great place to be. But I do wonder what system of government (in existence today or in years gone by) you would suggest could provide a paradigm for a better USA. None really comes to my mind.

      Risking taking the Bolshevik revolution as an example… There had never been a communist government. Lenin, Trotsky, Stalin, et. al., tried to do it — and failed. I am afraid that a libertarian government would fail as well. I would rather that it be tried on a smaller scale (Ireland, Estonia, Somalia (!), or Palestine (!!) maybe) than on a country with 350,000,000 people.

  • @Allan – I have some preferences for limited Democracy, as it at least implies the consent of the governed. As a practical matter, a Republic is the only efficient way to make that work, direct democracy is essentially mob rule in a country of any significant population. Limited, because there are ample experiences of mob action in the height of passion, few are shining moments of human achievement – more often, they represent the lawless prejudice of the group interspersed with pockets of deliberate criminal action. That said, I have little direct experience with other governing forms, only historical examples which enjoyed various measures of success. Even an enlightened monarchy can (briefly) work – history simply teaches that one’s offspring, over one or more generations, inevitably fail to live up to the example set by that first highly qualified individual. Of course, an enlightened monarch usually begins as a conqueror one welcomes…

    Violence is implicit in governing, which often causes me to wonder why so many willingly embrace more violent systems of rule than is needed to ensure the mutual defense, establish standards of measure (time, mass, length, etc), to enforce contracts between parties, to see to the the commons, and to address those who can not comport themselves with the social contract of the group’s governance (thieves, murderers, etc). Often, of course, it with the aim of turning that violence of rule upon others whose “otherness” the group finds scary or morally reprehensible.

    My primary concern, of course, is in the size of government, more so than its type. As I commented above, a much smaller, less intrusive government (of whatever form) would still allow considerably greater freedoms and be less tempting a target of regulatory capture by the very powerful – whatever its nature. Also, the smaller the government, the more likely I can “vote with my feet” if I don’t like it and can’t change it.

    Your small scale examples, I would suggest, are no different functionally than our US states, but for the powers our Federal Government has taken for itself (often with the consent of the states involved).

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